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A Theory of Credit Bureaus


  • Laband, David N
  • Maloney, Michael T


When both the buyer and seller have the potential to exercise opportunistic behavior, some balancing of these malincentives must be found. Seller financing has the potential to work as a quality assurance device because the lien holder is clearly at risk when mortgaged property fails. The buyer is at risk in the amount of the down payment and installments if the property is abused. Credit bureaus act as arbitrators. The authors' model accurately predicts the shifting in contract terms to account for relative opportunism and the incidence of this contract based on changes in the relative costs and benefits. Copyright 1994 by Kluwer Academic Publishers

Suggested Citation

  • Laband, David N & Maloney, Michael T, 1994. "A Theory of Credit Bureaus," Public Choice, Springer, vol. 80(3-4), pages 275-291, September.
  • Handle: RePEc:kap:pubcho:v:80:y:1994:i:3-4:p:275-91

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    References listed on IDEAS

    1. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
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    Cited by:

    1. Shaun M. Tanger & Richard Alan Seals Jr. & David N. Laband, 2011. "Does Bill Co-sponsorship Affect Campaign Contributions?: Evidence from the U.S. House of Representatives, 2000-2008," Auburn Economics Working Paper Series auwp2011-09, Department of Economics, Auburn University.
    2. Tirtiroglu, Dogan & Laband, David N., 2004. "The quality assurance role of seller financing: evidence from second mortgages," Journal of Housing Economics, Elsevier, vol. 13(3), pages 208-225, September.

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